Pages

Monday, February 6, 2012

North Dakota Surpasses OPEC Member Ecuador in Oil Production

By Joe Carroll, Bloomberg, Jan 10, 2012
North Dakota oil production surged 42 percent to 510,000 barrels a day in November, exceeding the output of OPEC member Ecuador, as energy explorers accelerated drilling in the Bakken Shale formation.

The state’s daily crude output topped a half-million barrels for the first time during the month, North Dakota’s Oil and Gas Division said today in a statement. North Dakota’s 6,300 wells produced enough oil to displace imports from foreign suppliers such as Iraq or Colombia, Lynn Helms, division director, said in the release [Helms added that a half a million barrels a day represents about 10% of U.S. production. Please see a press release from ND Oil and Gas Division, Jan 10, 2012 -- D.R.].

Oil producers including EOG Resources Inc. (EOG) and Continental Resources Inc (CLR). have spurred a five-fold increase in North Dakota’s oil output by using intensive drilling practices to tap the Bakken, a geologic formation that stretches from southern Alberta to the northern U.S. Great Plains. It’s estimated to hold as much as 4.3 billion barrels of technically recoverable oil in North Dakota and Montana, according to a 2008 report by the U.S. Geological Survey.

“This is big news for the state and the country,” Helms said. “Oil production in the state has increased anywhere from 8,000 to 40,000 barrels a day every month since June.”

Production will continue to increase as drillers hone their techniques, Andrew Steinhubl, co-leader of consulting firm Bain& Co.’s North American oil and gas practice, said in a Jan. 6 interview from Houston.

Rising Crude Production

In the Bakken formation alone, crude production rose 56 percent in November to 443,425 barrels a day from a year earlier, state figures showed. Bakken oil accounted for 87 percent of the state’s total November output.

Continental, the Enid, Oklahoma-based oil company controlled by billionaire Harold Hamm, is the largest leaseholder in the Bakken shale region, with 901,000 acres, based on third-quarter 2011 data compiled by Bloomberg Industries. Hess Corp. of New York and Denver-based Whiting Petroleum Corp. are second and third with 900,000 acres and 680,000 acres, respectively.

Bakken crude is a low-sulfur variety preferred by refiners not equipped to handle heavier, more corrosive types of oil. Bakken crude rose 1.5 percent to $97.97 a barrel today at the Clearbrook, Minnesota, hub, according to data compiled by Bloomberg. The price has increased 15 percent in the past year.

Ecuador, with 500,000 barrels of daily output in November, was the smallest member of the Organization of Petroleum Exporting Countries, according to data from the International Energy Agency in Paris (Also, please see my post "World's Top 23 Crude Oil Producers, November 2011/Notes" -- D.R.).

(North Dakota produced a record 152.9 million barrels of crude in 2011, up more than 35 percent from the previous record of 113 million set a year earlier. Daily production was up to a record 534,000 barrels per day in December 2011---please see Grand Forks Herald, Feb 8, 2012. For the North Dakota oil ranking, please see Aaron and David Rachovich, "United States: Top 8 Crude Oil Producing States, 2006-Feb.2011." Update: North Dakota has overtaken California as the third-largest oil-producing state in the nation---please see my post "Five States Accounted for about 56% of Total U.S. Crude Oil Production in 2011." Update 2: Crude oil output in North Dakota reached a record high in February [2012] as a mild
winter boosted activity in the Bakken shale prospect, bringing the state closer
to overtaking Alaska as the second-largest oil producer in the country. North Dakota crude oil production rose by about 12,000 barrels per day (bpd),
to more than 558,000 bpd, data from the state regulator showed [...],
affirming the state's position as the third-largest producing state in the union
after Texas and Alaska---please see Reuters, Apr 11, 2012. Update 3: North Dakota passed Alaska in March 2012 to become the second-leading state in crude
oil production, trailing only Texas---please see my post "North Dakota Tops Alaska in Oil Production, Trailing Only Texas." Operators increased North Dakota's Bakken production from less than 3,000 barrels per day in 2005 to over 230,000 barrels per day in 2010. The Bakken's share of total North Dakota oil production rose from about 3 percent to about 75 percent over the same period. North Dakota produced an average of 307,000 barrels of crude oil per day in 2010 and comprised about 5.6 percent of the nation's total crude production. For North Dakota's oil production in historical perspective, please see my post/remarks here -- D.R.)